May 27, 2022/Coronation Report

The latest national accounts released by the National Bureau of Statistics (NBS) show that GDP grew by 3.1% y/y in Q1 ‘22 compared with 3.9% y/y in Q4 ’21.

This growth can be partly attributed to positive base effects (GDP grew by 0.51% y/y in Q1 ’21) and CBN interventions in key sectors. On a q/q basis, it contracted by -14.7%, reflecting slower economic activity compared with the preceding quarter.

The oil economy contracted by -26.0% y/y in Q1, compared with -8.1% y/y recorded in Q4. Meanwhile, the non-oil economy grew 6.1% y/y in Q1 ’22 compared with 4.7% y/y in Q4 ‘21.

Over the past eight quarters, the oil economy has contracted by an average of -12.5% y/y. Bonny light increased by 46.2% from USD76.3/b at end-December ’21 to close at USD11.5/b at end-March ’22. Oil prices continue to be influenced by the relatively healthy demand, the Russia-Ukraine crisis, and supply constraints as OPEC+ struggle to meet production targets. According to the latest monthly OPEC report, production in April ‘22 averaged 37.7mb/d. This is below the 41.3mb/d target. Brent and Bonny Light stood at US116/b and USD121.7/b respectively at 24 May ’22.

Based on data from the NBS, average crude oil production (condensates inclusive) in Q1 was 1.49mbpd compared with 1.50mbpd in the previous quarter and 1.72mbpd in Q1 ‘21. As at end-March, the OPEC production quota for Nigeria was 1.7mbpd. Meanwhile, the revised FGN oil production benchmark is 1.6mbpd. The sector has suffered from production shut-ins as a result of massive theft of crude oil between production platforms and terminals over the past months. The performance of this sector also reflects the impact of low investment, poor infrastructure, and divestments by international oil companies of their onshore assets.

According to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), in Q1 ’22, crude oil production (condensates inclusive) declined across the Bonny (-49.0% y/y), Brass (-21.7% y/y), Qua Iboe (-13.3% y/y), Escravos (-18.9% y/y), Agbami (-13.8% y/y), Egina (-2.5% y/y), Bonga (-7.3% y/y), and Forcados (-3.5% y/y) production terminals. These terminals jointly contributed 68% to total crude oil production in Q1 ‘22. Overall, the oil sector contributed 6.6% to the total GDP in Q1 ‘22.

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